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Sep 21, 2018

DealBook Briefing: Does Bank of America Care About Investment Banking?: Business I DealBook I NYT

Good
Friday. On today’s episode of “The Daily,” the NYT’s news podcast,
Andrew talks with Michael Barbaro about the 2008 financial crisis. You
can listen on a computer, iOS device or Android device. Want this in your inbox every morning? Sign up here.

Bank of America’s investment banking arm lost a thirst for risk

Bank
of America quietly announced this week that its investment-banking
chief, Christian Meissner, would step down by the end of the year. Now
we may know why: He questioned the firm’s commitment to being a
top-ranked investment bank, according to the FT.
After
buying Merrill Lynch a decade ago, it appeared eager. But in recent
years its appetite for risk seems to have diminished: It avoided some
plum work, like advising on Saudi Aramco’s I.P.O., and has slid down the
rankings of M.&A. advisers.
When Mr. Meissner leaves, other
senior bankers may soon follow. But the C.E.O., Brian Moynihan, probably
won’t lose much sleep: Investment banking is just a sliver of overall
revenue; it’s still winning top mandates; and the bank’s shares are up
27 percent year-over-year.

More banking news: HSBC deal makers wrote a memo to their new C.E.O. complaining that the lender’s investment banking strategy had “utterly failed.”

ImageMeet the Amazon clock and a new smart speaker.CreditAmazon, via Associated Press

Amazon’s Alexa plan? Put it everywhere, A.S.A.P.

The e-commerce giant announced a glut of new products yesterday,
all powered by its voice assistant, Alexa. Microwaves, clocks, smart
plugs, in-car navigation devices — the technology has now moved well
beyond humble smart speakers (though they got an update too). Even for a
big tech company, that is an impressive number of products to unveil at
once.
But that’s necessary. Amazon enjoyed an early lead in the
voice assistant market, beating Google to the smart speaker market by
almost two years and Apple by three. But Google has been catching up,
and a recent report by Strategy Analytics said that the Home Mini was the best-selling smart speaker in the second quarter.
Amazon
also lacks deep smartphone integration for Alexa, because it doesn’t
have its own phone ecosystem like Apple and Google do. So its plan is to
put Alexa everywhere else.

Image

CreditBryan R. Smith/Agence France-Presse — Getty Images

Everything is great (on the markets)

The
S.&P. 500 rose 0.8 percent yesterday to set an all-time high. The
Dow Jones industrial average also set a record. That puts them on track
to exceed Wall Street’s expectations for 2018.
The performance is
buoyed by a U.S. economy that continues to improve. The Fed is expected
to raise interest rates next week. And even with unemployment at its
lowest level in almost two decades, initial jobless claims — a measure
of layoffs — fell this week to their lowest level since 1969.
There’s plenty going on that could upset things, including trade disputes and economic jitters. But BlackRock thinks there’s not that much for investors to worry about. Those markets look set to keep climbing.

The days ahead

Farfetch will begin trading today. The online luxury goods site priced its I.P.O. at $20 a share, above its expected range, and raised $885 million. Investors are likely to clamor for its shares this morning.Sky will be sold off in an auction. Comcast
and 21st Century Fox will compete for the British broadcaster over as
many as three rounds of bidding, beginning Friday evening. A winner in
the monthslong takeover battle is set to be announced this weekend.

World leaders will gather for the 73rd annual United Nations General Assembly. President Trump is expected to champion U.S. sovereignty when he addresses the assembled leaders in New York next week.

Image

Les MoonvesCreditLucy Nicholson/Reuters

Les Moonves may still get his millions

Mr.
Moonves was forced out as the CBS chairman and C.E.O. amid sexual
misconduct accusations. But Jim Stewart of the NYT points out that he
may still collect $120 million in severance if the broadcaster can’t prove that he was fired for cause:

Mere
allegations of sexual misconduct, which now have been made publicly
against Mr. Moonves by 12 women, do not constitute cause. Nor is it
likely that behavior that occurred before he joined CBS could be
considered a violation of any company policy. Mr. Moonves has denied any
improper behavior. He says that any sexual activity was consensual and,
for the most part, occurred before he came to CBS.

CBS’s
board knows that it’s in a bind. Paying Mr. Moonves anything would
create a P.R. headache, but refusing to pay could kick-start a messy
legal fight. Those may be its only options.

Image

CreditElijah Nouvelage/Agence France-Presse — Getty Images

Google workers considered tech tweaks to counter the travel ban

After
President Trump announced his travel ban in January 2017, Google
employees wondered if the company’s search engine could be modified in
order to direct people to pro-immigration groups, or show them ways to
campaign against the policy. Here’s more from John McKinnon and Douglas MacMillan of the WSJ:

A Google spokesperson told the newspaper that they were ideas that were never implemented.

Image

Bill McGlashan of the Rise fund.CreditBrendan Moran/Sportsfile for Web Summit

TPG plans a sequel for its social impact fund

The
investment giant caused surprise two years ago when it unveiled its $2
billion Rise fund, dedicated to investing in companies that help
society. Now the firm is preparing to raise its second such fund, Michael de la Merced reports in DealBook.
Rise
is the biggest example of Wall Street’s push into social impact
investing. It is based on what TPG says is a complex model to measure a
company’s success on that front. Interest in the fund is said to be
high. But TPG executives told Michael that they want other private
equity titans to move into the space, which would give impact investing
more clout.

Image

Elon MuskCreditStephen Lam/Reuters

Tesla’s biggest problem might not be Elon Musk

With
a federal investigation, a long line of departing senior executives,
and fears about an unpredictable C.E.O., it’s easy to forget about
Tesla’s dire financial situation. But Bill Cohan explains in an NYT Op-Ed just how bad things are:

Tesla’s
finances are fragile. It has around $11 billion in long-term debt and
no profits. “That is not a sustainable business model,” Jim Collins, a
longtime auto industry research analyst, wrote in Forbes in April. “Not
even close.” From January to June of this year, Tesla generated revenues
of $7.4 billion, but it had an operating loss of $1.7 billion, burning
through its cash on hand. It has $2.2 billion left, most of which will
be needed to cover operating losses. Romit Shah, a research analyst at
Nomura Instinet and once one of Tesla’s biggest boosters, reversed
course last week, calling the company “no longer investable.”

The speed read

Deals
•
Emirates is reportedly considering a takeover of its unprofitable
rival, Etihad, to create the world’s biggest airline by passenger
traffic. (Bloomberg)
• AT&T defended the court ruling that let it buy Time Warner, arguing the Justice Department’s appeal had no merit. (WSJ)
• Uber is said to be in talks to buy Deliveroo, the European food-delivery service. (Bloomberg)
• Adobe agreed to buy the online marketing company Marketo for $4.75 billion. (WSJ)
• Aurora Cannabis, the marijuana producer, plans to go public in the U.S. this fall. (Financial Post)Politics and policy
• Michael Cohen has spoken repeatedly with Robert Mueller’s team over the past month. (NYT)

• Christine Blasey Ford is negotiating with the Senate to testify about her sexual assault accusations against Brett Kavanaugh. Americans’ opposition to the Supreme Court nominee has grown.
• E.U. leaders rejected Britain’s proposal for Brexit. Prime Minister Theresa May of Britain promised to find a solution.
• Foreign hackers have targeted senators’ personal Gmail accounts. (CNN)
• Najib Razak, the former Malaysian prime minister, pleaded not guilty to 25 criminal charges, including money laundering. (WSJ)Trade
•
South Korea’s finance minister expressed hope for a U.S. trade deal,
but lawmakers are wary of American tariffs on Korean cars. (WSJ)
• China is trying to get products into the U.S. before new tariffs kick in on Monday. (Bloomberg)
• Caterpillar’s response to the trade war is a two-year-old cost-cutting strategy. (Reuters)Tech
• The Trump administration has a new national cybersecurity strategy. Details will be made public soon. (Axios)
• YouTube and Google are under renewed pressure to change how they track children’s data. (NYT)
• How Qualcomm tried — and failed — to beat Intel at building chips for servers. (Bloomberg)

• Facebook says it will provide less support to future presidential campaigns. It will also review its policies on white nationalism, and says it “needs more people” to tackle hate speech.Best of the rest
• Minneapolis prosecutors are reviewing the rape allegations against JD.com’s C.E.O., Richard Liu. (WSJ)
• Beyoncé and the hedge fund titan Ken Griffin have mortgages, too — but they pay hundreds of thousands of dollars a month. (WSJ)
• Why America should embrace market surveillance in sports betting before it’s too late. (DealBook)
• Airlines are increasing fees for checked baggage. (NYT)
• Mark Bertolini, the C.E.O. of Aetna, explains his love for yoga and meditation. (NYT)Thanks for reading! We’ll see you on Monday.We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

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